What Does a Market Maker Do?

A market maker is a safety mechanism in a SME IPO. Their role in SME IPOs, where trading volumes are low is to ensure smooth trading, liquidity, and price continuity. For a retail investor, a market maker is like a liquidity provider.

• Provides continuous Buy & Sell quotes: Market maker places buy orders (bid price) and sell orders (ask price). This ensures there is always buyer when you want to sell, a seller when you want to buy.
• Ensures liquidity after listing: Liquidity means how easily you can trade a stock, prices move in a orderly manner, panic selling or price freezing is reduced.
• Reduces sharp price fluctuations: In low-volume stocks, even small trades can move prices sharply. A market maker narrows the bid–ask spread, absorbs some buying/selling pressure and helps stabilize early trading days.